An ‘EV Winter’ Is Coming for Tesla. Should You Sell TSLA Stock Now?

Electric Vehicle (EV) giant Tesla (TSLA) continues to struggle this year as demand weakens in major markets like Europe and China, where competition is only getting tougher, and the core EV business simply doesn’t carry the same excitement it once did. In fact, much of the market hype around Tesla today has shifted toward artificial intelligence (AI), autonomous vehicles, and robotics - exactly the way CEO Elon Musk wants the story to be told. Still, the performance of the core EV business matters, and that’s where the latest warning now comes into play.

Morgan Stanley just downgraded Tesla, adopting a more cautious stance on the broader U.S. auto sector heading into 2026. The bank warned of a potential “EV winter” that could weigh on demand and profitability across the industry. The leading investment bank now expects U.S. light-vehicle sales to decline to 15.9 million units next year, with EV volumes dropping around 20% and battery-electric penetration slipping to 6.5%.